There have been trade wars for quite some time in the East African Community and mostly it is featured over sugar exports by Uganda and Kenya. However, for past couple of months Kampala too has been locked with the same with Tanzania and the dispute is related to the 18 percent VAT on latter’s rice.
Rice in tens of thousands of tonnes are either lying at Mutukula and Port Bell or on some other towns in Tanzania bordering neighboring countries.
The EAC Customs union Protocol prevents any discrimination as well as imposition of internal tax, bt Uganda plans to go against the treaty and to apply VAT Act on products with partner states.
Tax policy officer at the Ministry of Finance in Uganda, Moses Egwapu, said as the VAT Act states rice from outside the country attracts VAT and so rice from Tanzania too need to pay VAT.
He added further that the VAT Act is applicable to all the rice imports in order to protect local industry as well as to give incentive to the millers in the country so that they can add value to their rice.
This move is same as Uganda has been implementing to protect its sugar millers from exporting its to Kenya that also resulted with Kampala blocking beef imports from Kenya.
The Ugandan rice growers have lately become alert politically and know when to push for protection from imports. Uganda will be undergoing election meanwhile and it is time to see whether government allows the imports.
